No guarantee MGM Cotai will open before CNY: MGTO

Maria Helena de Senna Fernandes, director of the Macao Government Tourism Office (MGTO), said on Wednesday that the body could not guarantee that MGM Cotai (pictured) will have its hotel licence ahead of the Chinese New Year period. The HKD27-billion (US$3.45-billion) MGM Cotai is the second property developed by Macau-based gaming operator MGM China Holdings Ltd.

The Chinese New Year period in 2018 falls on Friday, February 16. The Macau casino market typically sees a spike in gambling in the Chinese New Year holiday period.

In comments on Wednesday, Ms Senna Fernandes said the tourism bureau was making an effort to try to issue the operating licence for the hotel at MGM Cotai before the Chinese New Year holiday period. “But this process is not just related to us,” she told reporters.

“We are still waiting for the assessment reports from other departments involved in the process. If everything meets the required standards, we can move forward with the inspection and, eventually, issue the [hotel] licence,” Ms Fernandes added.

The tourism bureau confirmed to GGRAsia on Friday that it was yet to issue the licence for the hotel at MGM Cotai. “The licence application for the opening of the five-star hotel MGM Cotai and establishments inside the property is still waiting for the favourable opinions from related technical departments,” MGTO said at the time.

MGTO is the body responsible for authorising hotel operations in the city. According to information on the tourism bureau’s website, the issuance of a hotel licence however requires the approval from several other government departments, including for licences related to fire safety, water supply and power equipment.

MGM China said last week that the opening of the Cotai property had been delayed to February. The firm had said previously that the property was scheduled to open on January 29, with a “grand opening” to take place on February 13. The exact new opening date has not yet been confirmed by the casino operator.

Slower ramp-up

The delay in opening MGM Cotai and the lower-than-expected number of new-to-market gaming tables it received from the city’s gaming regulator could negatively impact the property’s earnings before interest, taxation, depreciation and amortisation (EBITDA) in 2018, said investment bank Morgan Stanley.

“We think the ramp-up may be slower than that of peers. Also, a smaller footprint and room sizes, and fewer tables, suggest lower EBITDA potential than the Wynn Palace and Parisian [Macao] when fully ramped up,” analysts Praveen Choudhary and Jeremy An said in a Wednesday note.

According to Morgan Stanley’s note, MGM Cotai is to open with approximately 1,400 rooms and the casino at the property will feature 177 mass gaming tables, 950 slot machines and 200 electronic table games (ETGs).

“The casino will open with 177 mass tables, with 77 tables being transferred from [MGM Macau on the] peninsula. This includes 12 direct VIP tables and 65 premium mass tables, with the remainder being grind mass tables. The company may move another 60-70 VIP tables (from peninsula) by mid-2018,” said the Morgan Stanley note.

Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, said last week that MGM China would get 100 new-to-market live gaming tables for the opening of its MGM Cotai. The government official added that the company would be granted an additional 25 new-to-market tables on January 1, 2019.

The tables were granted only for the mass-market segment, the city’s gaming regulator, the Gaming Inspection and Coordination Bureau, confirmed to GGRAsia in an emailed statement. The regulator also approved more than 900 slot machines for operation at MGM Cotai.

MGM China has also been authorised to transfer 77 gaming tables from MGM Macau, in the city’s traditional downtown casino district, to the Cotai venue.

Analysts at JP Morgan Securities (Asia Pacific) Ltd said the Cotai property from MGM China could be “received well by players”. The note followed a pre-opening tour of the property.

“Despite less-than-optimal number of tables, gaming floor doesn’t look ‘empty’ at all, thanks to its design (narrower than most other casinos) and slots/ETG products that fill the area,” JP Morgan analysts DS Kim and Sean Zhuang wrote in a Wednesday note.

“The property doesn’t have smoking-allowed gaming tables (same as other recent properties), but smoking lounges are easily accessible for both mass and VIP,” they added.

"We are building momentum and continuing to grow our business while at the same time operating more efficiently"Barry CottleChief executive and president of casino equipment maker and lottery services supplier Scientific Games